Vietnam's textile and garment exports reached $17.8 billion in the first five months of 2026, a modest 0.6% year-on-year increase. While this figure underscores the resilience of overseas demand, it also reveals a slowing growth momentum—relying solely on order volume expansion is no longer sufficient to sustain higher growth rates.
Cost and Competition Squeeze
Data from the Vietnam Textile and Apparel Association (VITAS) shows that rising labor costs are eroding the cost advantages built over the past decade. Meanwhile, countries like Bangladesh and Cambodia are diverting global orders with even lower labor costs, intensifying homogeneous competition. For buyers, higher demands on delivery timeliness and product quality force Vietnamese factories to compete beyond price.
VITAS Chairman Vu Duc Giang explicitly stated that the extensive growth model reliant on cheap labor has reached its limits. This means Vietnam's textile industry must find new breakthroughs in technological innovation and production efficiency, or risk losing market share to competitors.
Green Compliance as a Hard Threshold
The US and EU, as Vietnam's largest export markets for textiles and garments, are continuously upgrading trade access standards. Requirements for carbon emission control, renewable energy usage, and corporate social responsibility have shifted from added benefits to entry barriers. Factories that fail to meet green production standards will directly lose orders from these regions.
This shift directly impacts investment directions for Vietnamese textile enterprises. Industry experts recommend that the government guide capital toward high-tech production lines and environmentally compliant projects, phasing out outdated, high-energy-consumption capacity. At the same time, scaling up green textile industrial parks to create centralized, low-carbon production platforms can help elevate the industry's overall green performance.
Supply Chain Weaknesses Limit Benefits
Vietnam's textile and garment industry has a localization rate of only about 50%, with core raw materials like upstream fabrics and accessories heavily dependent on imports. This structural weakness prevents Vietnam from fully leveraging the tariff reductions and customs facilitation offered by multiple free trade agreements (FTAs). Export profits are eroded by import costs, and market expansion remains constrained.
Building a self-controllable domestic raw material supply chain has become a consensus. Only by reducing import dependency can Vietnam deeply tap the policy value of FTAs and further explore emerging markets to diversify single-market risks.
Transformation Path and Annual Target
Despite significant challenges, Vietnam's textile and garment industry maintains its 2026 export target of $50 billion. Industry analysts believe that overseas rigid demand provides a basic support for the sector, but achieving the annual goal requires simultaneous progress in three areas: digital production transformation, core technology upgrades, and green sustainable development.
From the procurement perspective, Vietnamese factories that can meet standards on delivery time, quality, and environmental compliance simultaneously will remain key supply bases for global brands. The critical question is whether the industry can transition from "manufacturing" to "smart manufacturing" amid cost pressures.